Part II · Chapter 4 · Engine · lesson 1
Who pays, and why
10 min
Builds on What a price is transmitting
Part II · Chapter 4 · Engine · lesson 1
10 min
Builds on What a price is transmitting
A weather app has four million users. It costs nothing to install and nothing to run per person to speak of. It made 11 million last year.
Ask most people who pays for that app and they will say the users. The users have never paid anything. The people who pay are the advertisers, and what they are buying is not weather — it is the attention of someone who has just been told it will rain at four.
That is the first question, and it is the one businesses answer wrong most often: who pays. Not who benefits, not who uses it, not who loves it. Who transfers money.
A business is a machine that turns a cost into a payment somebody chooses to make. Everything else — the product, the brand, the office, the mission — is plumbing between those two ends.
Most explanations of a business start at the product. Start at the payment instead and the whole thing rearranges. You find out very fast which parts of the machine are load-bearing and which parts are decoration.
They are the same person in a bakery. They come apart the moment somebody else is paying, and they come apart in almost every large business you interact with daily.
Not the same thing
The person who touches the thing and gets value from it.
The person or organisation whose money actually arrives.
Which is which? Put each one on a side.
A child playing a free game with adverts in it
A hospital purchasing department buying scanning software
A radiographer using that scanning software all day
Someone buying bread in a bakery
When the user and the customer are different people, the product drifts towards the customer. That is not corruption. It is gravity. The revenue line is the only signal that arrives with a number attached to it, and organisations optimise the signals they can read.
Payment is not a reward for effort. Nobody has ever paid for a thing because it was hard to make. People pay for a small number of reasons, and it is worth being able to name which one is operating:
A pain removed. Something hurts, recurrently, and this stops it.
Time bought back. They could do it themselves. They would rather not.
Money made. The spend has a return attached, and the buyer can point at it.
A risk transferred. The loss might not happen. If it does, it is not theirs.
A status or identity confirmed. Real, large, and rarely stated out loud by the person paying.
Predict
This track builds one habit, and the habit is nine questions. By the end you will be able to run them on any business in about ten minutes, on the back of something, in a queue.
The first two are this lesson. The rest arrive one or two at a time, and the last lesson in the track runs all nine end to end on one ordinary business.
The questions are in this order deliberately. Questions one and two decide whether there is a business at all. Three, four and five decide whether it can be profitable. Six, seven and eight decide whether it stays profitable. Nine is the one that gets skipped, and it is the one that arrives anyway.
A business that cannot answer question one is not a bad business. It is a project, possibly a very good one, that somebody has confused with a business.
Check
Advertising, insurance, employer-funded healthcare, public services, app store platforms, freemium software. In every one, the person receiving the thing is not the person paying for it, and in every one the same distortion appears: the product gets very good at whatever the payer measures and merely adequate at whatever the user experiences.
This is not a story about villains. It is what happens when the feedback with a number attached to it comes from one direction only. The organisations that resist it are the ones that go to deliberate expense to hear from the user — and that expense is a real cost, which is why most do not.